Managing Director of Kraken Australia, Jonathon Millers talks how the cryptocurrency exchange weathered the bear market storm.

Release the Kraken: Why Jonathon Miller Is Mega Bullish on Crypto in Australia

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A prolonged stream of pessimistic news on the crypto market has left plenty of FUD (fear, uncertainty and doubt) on the future of decentralised finance (DeFi). Newcomers to the new and alternative system jumped aboard an exciting rollercoaster, reeling when their portfolios began flashing a dreaded red. There’s a larger surprise here than a bear market, which is that investors have forgotten a bull market doesn’t last forever.

Recent events in DeFi have left many questioning the fundamental framework of blockchain technology, but for the OGs, this is nothing out of the ordinary. The recent market carnage has sent shock waves from TradFi to crypto, with Wall Street’s highest elite on edge.

Amid global lay-offs of staff in the tech industry, one exchange has managed to stay afloat. The Chainsaw sat down with one of the largest exchanges in the world, Kraken, and the head of its Australian team, Managing Director Jonathon Miller, to find out how they’ve survived in a volatile bloodbath of sorts.

According to Miller, the fundamentals of blockchain remain perfectly intact. Over Zoom, he is inspiringly calm and continues to see the bright future ahead for blockchain technology. Imploring people to look past the noisy headlines, he believes blockchain technology has never been more resilient.

“There’s no problem with blockchain. It’s companies with bad balance sheet management, plain and simple.”

Miller, an avid swimmer and manager of his own independent record label, Broken Stone Records, is a self-taught software engineer with a budding interest in the macro aspects of cryptocurrencies from his political economics degree. His thesis on supranational money coincided with an introduction to Bitcoin, which solidified his certainty about the “Venn diagram of [his] interests” and he made it his mission to launch into non-state issued money.

He became enthralled with Bitcoin and the concept of distributed ledger technology as a way to create decentralised, programmable money back in 2013, so his patience and virtue in winter times come as no surprise. His journey into the space was four years after Bitcoin’s Genesis Block, when the price hovered around US$300.

“It took hold of my trajectory — I was lucky enough to meet some of the earliest contributors to Ethereum and other startups in the space using blockchain,” Miller said.

“I realised Bitcoin was really hard to access here in Australia, so I co-founded a brokerage which was the start of my journey into crypto markets.” It was then that he launched Bit Trade, one of Australia’s first ever crypto exchanges.

How do the OGs remain so calm?

It’s safe to say that Miller understands the crypto space better than most, and erroneous claims that ‘crypto is failing’ frustrate him to no end. He pointed out that it’s crucial to know exactly what is ‘actually’ failing when looking at the crypto industry.

“Did Bitcoin, Ethereum or any decentralised network fail when volatility came for crypto? No. It was private firms with terrible balance sheets that fell over,” he said.

While companies like Voyager Digital and Celsius, alongside trade shops like Three Arrows Capital, may have been liquidated to near inexistence, Miller believes it’s because their treasuries were being fundamentally mismanaged.

He said the same goes for the roster of companies that “went hard” during the bull market and have since been in the very uncomfortable process of tightening their belts, which usually equates to firing people.

Growth first, ad spend second

Miller highlighted the multimillion-dollar agreements seeping into Australian sport — the AFL recently inked a US$25 million deal with Crypto.com, while Western Bulldogs got a pump from CoinSpot.

He noted that while there are definitely upsides to major league sponsorships like the AFL, UFC or World Cup, he thinks there are some major downsides as well.

“While I think hype can be beneficial, it can also be detrimental,” Miller said.

Globally, Crypto.com renamed the Staples Centre in their own light, featuring ads with Matt Damon telling crypto-fence-sitters that “fortune favours the brave”.

Now, the Singapore-based crypto exchange has been caught lying about the number of employees it’s laying off. With more than 50% of all new hires occurring during the peak of the bull market, it seems like Crypto.com may have rushed into things.

While crypto is undeniably one of the more volatile spaces to conduct business, belt-tightening is a consistent theme throughout the more traditional industry sectors as well. As of today, the tech sector in the US has cut a staggering 39,000 jobs since the beginning of the year, as companies everywhere begin the uncomfortable process of cutting back.

The tech sector in Australia has seen similar cutbacks with multiple startups going from “multi-million-dollar valuations” to laying off staff in a matter of months.

Seemingly immune to these woes, Kraken is still hiring, which comes down to the fact that because the firm practises some of the highest standards of bookkeeping and treasury management in the industry — preferring a strategy that minimises volatility and grows a stable set of reserves over time.

“We’ve just been a bit more careful about that. We’ve been concentrating on building this whole time while also building reserves, because we know that this market is still in an experimental phase,” Miller said.

Why crypto?

While footy enthusiasts are more friendly to a crypto leap, the bearish public sentiment has left many questions in the air, including a key question: why crypto?

Miller sees Australia as more bullish than most when it comes to crypto adoption, which shows it’s still on the incline. According to Miller, the Australian ecosystem is teeming with “hundreds of great businesses and developers”, who say that the Aussie-grown crypto industry has a huge uptake rate. With his ears to the ground, he said, “In Australia, the signal to noise ratio is really high.”

To prove his point further, Miller referred to recent headlines like Mastercard partnering with Blockchain Australia to further expand its reach into digital finance. Then there’s ANZ bank, which is set to release an AUD-pegged stablecoin alongside the RBA’s move to develop a pilot program for a central bank digital currency (CBDC).

Debates continue over the intentions and needs for an Australian CBDC, but Miller argued that the changing nature of crypto adoption shows once again that the underlying thesis of permissionless, programmable assets people will soon just call ‘money’ are superior to traditional means of currency issuance.

So where the bloody hell are you, Australia?

The looming spectre of regulation has been ever-present for the Australian digital asset space. Over the past few months, crypto industry leaders anxiously awaited the newly elected Labor Government’s statement for some clarity on their stance towards the industry

In the second-last week of August, some of this tension was alleviated, with Federal Treasurer Jim Chalmers announcing a “token mapping” exercise. The decision breaks the three-month-long regulatory silence from the newly elected Labor Government, allowing those in the crypto industry with uncertainty to take some weight off their shoulders.

Miller echoed these sentiments, saying that while the recent ruling was a nice start, it may be a little too slow to have the desired effect of protecting crypto investors. For Miller, more effective regulation would look like creating some methods for businesses and some benchmarks for businesses would provide more assurance for clients.

Time to touch grass

The CEO of Digital Currency Group Barry Silbert might have simplified the crazy world of crypto best when he tweeted the following:

Miller’s well-tempered optimism is something the industry needs — and he’s conscious to not get swept away in the ever-accelerating, quite literally sleepless world of digital assets.

When he’s not flying around the globe for IRL meetups and running one of Australia’s largest crypto exchanges, he finds peace in managing Broken Stone Records. In the same way that he oversees the success of Kraken’s treasury, Miller prefers to work with artists that “want to keep creating in the long run”.

For those plagued with uncertainty, Miller shared a reminder that despite the storm clouds, the sun hasn’t gone anywhere. Maybe it’s time to go and ‘touch grass’ (crypto parlance for forcing oneself outside to reset).